Sen. Irving Gerstein refuses to step down as banking committee chair

OTTAWA -- Conservative Sen. Irving Gerstein has thwarted a Liberal move to remove him as chairman of a powerful Senate committee until he explains his role in the upper chamber's expenses scandal.

Liberal Sen. Celine Hervieux-Payette raised a point of order Wednesday asking that Gerstein step aside as chairman of the banking, trade and commerce committee until his name is cleared by the RCMP or he agrees to testify before another Senate committee about his role.

Gerstein, who heads the Conservative party's fundraising arm, has been identified in RCMP documents as a central figure in the scheme to reimburse Sen. Mike Duffy for his invalid expense claims and to interfere in an independent audit of Duffy's expenses.

Gerstein and other Conservative senators were clearly taken aback by Hervieux-Payette's move, which she made just as the committee was about to hear a presentation from junior finance minister Kevin Sorenson.

"I am quite surprised that you would raise that issue at the committee meeting here," Gerstein said.

The move set off momentary panic among Tory aides who made frantic calls outside the committee room to enlist more Conservative senators to attend the meeting and vote down Hervieux-Payette's proposal.

It never came to that, however.

"I have been elected as committee chair and I rule the motion out of order," Gerstein pronounced after a few minutes of confusion.

Hervieux-Payette, who is the committee's vice-chair, did not challenge his ruling.

"Banking committee, for me, is one of the (most) prestigious committees on the Hill ... So when your chair, who is in contact with all the financial institutions of the country, is under suspicion I think it's quite normal to ask him to answer questions," she said later outside the committee room.

"He is one of the key players and I think we need to know the answers he will give."

RCMP documents filed in court two weeks ago suggest Gerstein was involved in a deal in which former prime ministerial chief of staff Nigel Wright paid Duffy $90,000 so that he could reimburse the Senate for improperly claimed living expenses.

The Mounties allege the scheme means Wright and Duffy engaged in bribery, fraud and breach of trust. No charges have yet been laid and none of the allegations have been proven in court.

According to witness statements and emails obtained by the RCMP, Gerstein initially agreed to have the Conservative party pay Duffy's tab -- believed at the time to be $32,000 -- but balked when it later became clear the bill was more than $90,000.

In the House of Commons on Wednesday, Liberal Leader Justin Trudeau said it's well known that offering money to a sitting legislator is illegal and questioned why Gerstein still enjoys "the complete confidence of the prime minister."

"Of course, the senator denies that," Harper responded, presumably referring to Gerstein's assertion during a speech to the Conservative national convention last month that he had refused to use the Conservative Fund to pay Duffy's expenses.

Harper also repeated that only two individuals are under police investigation over the matter: Duffy and Wright.

That being the case, Trudeau questioned why Conservative senators are refusing to hear testimony from Gerstein and an auditor he is alleged to have contacted, on the grounds that it might interfere with the RCMP investigation.

"The government cannot have it both ways," he said.

The RCMP documents include an email trail which shows Wright dispatched Gerstein to speak to "senior contacts" at Deloitte in a bid to ensure the independent, external audit of Duffy's expenses would make no finding as to whether his primary residence was in Ottawa or P.E.I., the province Duffy was appointed to represent.

Gerstein has declined to comment on the revelations other than to say he is "co-operating fully" with the RCMP.

Gary Timm, lead Deloitte auditor on the Duffy file, told the Senate's internal economy committee last week that he received a call from the firm's managing partner, Michael Runia, who wanted to know how much Duffy would owe if his living expense claims were invalid. Timm said he told Runia it would be inappropriate to discuss a confidential audit and cut the call short.

Timm and other members of his audit team insisted their audit was not influenced by Runia or anyone else.

However, the RCMP-obtained emails show senior aides in Prime Minister Stephen Harper's office appeared to have inside, advance knowledge that the audit would not be able to make any finding on Duffy's primary residence because the senator had refused to meet with auditors.

Conservative senators on the internal economy committee last week rejected a Liberal attempt to have Runia called to explain why he sought information on what was supposed to be a confidential audit.

The Liberals followed up with a motion to have the full Senate call Runia as a witness. That motion went down to defeat Wednesday by a margin of 51-30, with three Conservative senators -- Gerstein among them -- abstaining.

"Most Conservative senators stood up there to support the continuing coverup," Liberal Senate leader James Cowan said following the vote.

"Why? What do they have to hide?"

Conservative Sen. Pierre Claude Nolin said he abstained because he felt both parties were being too partisan in their approach to the issue.

Sen. Hugh Segal said he abstained because he doesn't trust the Senate's internal economy committee to deal with the matter fairly, given "how badly it's performed in the past" in overseeing the audits of four senators' expenses.